AIR Worldwide Releases Multi-Peril Crop Insurance Model for India
November 04 2019 - 06:12AM
Catastrophe risk modeling firm AIR Worldwide (AIR) today announced
that it has released a Multiple Peril Crop Insurance (MPCI) Model
for India to help support probabilistic assessments of potential
losses caused by yield shortfalls for 11 major crops across the two
main Indian crop-growing seasons. AIR Worldwide is a Verisk
(Nasdaq:VRSK) business.
The MPCI Model for India is an event-based model, with an event
defined as an individual crop year made up of a kharif season (the
“summer” period from late spring into autumn) and the following
rabi season (the “winter” period from autumn into the following
spring).
“One of the many challenges in developing and testing an MPCI
model for Indian crops is the collation and evaluation—quality
assuring—of the available historical data on planted areas and
yields of insured crops, which comes from various, sometimes
contradictory sources,” said Dr. Jeff Amthor, assistant vice
president, AIR Worldwide. “Our team at AIR invested significant
effort in gathering data and, just as important, in screening it
for quality and consistency. As a result, we produced what may be
the highest-quality single data set of India’s state and district
crop production statistics currently available. We also carried out
a significant effort to understand the causes and consequences of
the sometimes significant differences among weather data
sources.”
The model features a stochastic catalog of 10,000 simulated crop
years, each containing a kharif season and the following rabi
season, which describes the wide range of possible crop loss
scenarios, both common and rare, in the two seasons. It also
features a historical catalog of losses based on a recast of the
years 1979 through 2017. Both the stochastic and historic recast
yield and loss catalogs reflect current crop “technology” levels
(for example, current crop genetics, farmer skill, availability of
chemical inputs), insurable exposure by district, and PMFBY
(Pradhan Mantri Fasal Bima Yojana) policy conditions as revised in
late 2018.
Damage estimation accounts for the vulnerability of different
crops to variations and extremes in environmental conditions that
occur at specific periods during both the kharif and rabi growing
seasons. A crop’s vulnerability to stressful environmental factors
(such as local or regional heat waves, droughts, or floods) can
differ with each crop’s developmental stage, and that is accounted
for in the AIR MPCI Model for India. The model also accounts for
the fact that irrigation lessens or eliminates negative effects of
precipitation shortfall on crop yields.
The model uses a combination of quality-assured historical yield
events and both historic and stochastic all-India gridded weather
data sets composed of daily values of minimum air temperature,
maximum air temperature, rainfall amount, and maximum wind speed to
simulate a full range of crop insurance loss outcomes under the
current terms of the PMFBY. Simulations of annual weather over the
entire country reflect today’s climate. Probabilistic assessments
of loss return periods for the10,000 scenario years are provided
for individual crops in each insuring district and provide complete
loss profiles by return period. Those results can be integrated to
any level of aggregation desired to support evaluation of risk at
the portfolio level.
“Despite the long and extensive history of agriculture in India,
it is only recently that multiple-peril crop insurance has been
widely available to farmers,” said Dr. Praveen Sandri, executive
vice president and managing director, AIR Worldwide India. “One of
the most valuable components of this model is that reinsurers in
the India crop market can have their exposure data analyzed at the
district level or aggregated to the cluster and/or state level for
individual crops or all crops combined. Additionally, the model can
provide guidance toward putting together a balanced book of
business that considers geographic correlations in a complex
agricultural market.”
The AIR MPCI Model for India is currently available in the
Touchstone ReTM catastrophe risk management system.
About AIR WorldwideAIR Worldwide (AIR) provides
risk modeling solutions that make individuals, businesses, and
society more resilient to extreme events. In 1987, AIR Worldwide
founded the catastrophe modeling industry and today models the risk
from natural catastrophes, terrorism, pandemics, casualty
catastrophes, and cyber incidents. Insurance, reinsurance,
financial, corporate, and government clients rely on AIR’s advanced
science, software, and consulting services for catastrophe risk
management, insurance-linked securities, longevity modeling,
site-specific engineering analyses, and agricultural risk
management. AIR Worldwide, a Verisk (Nasdaq:VRSK) business, is
headquartered in Boston, with additional offices in North America,
Europe, and Asia. For more information, please visit
www.air-worldwide.com.
###
For more information, contact:
Kevin Long
AIR Worldwide
+1-617-267-6645
klong@air-worldwide.com
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